October 20, 2017

New and Revised Ethics Opinions Address Unbundling, Missing Clients

The Colorado Bar Association’s Ethics Committee has released Formal Opinion 128, addressing missing clients, and has revised Formal Opinion 101, addressing unbundling of legal services. Formal Opinion 128, “Ethical Duties of Lawyer Who Cannot Contact Client,” addresses situations where a client disappears at some time during the representation, or situations where a lawyer is retained by an insurance company to represent an insured but cannot locate the client. The CBA Ethics Committee opines that the lawyer should continue to act on behalf of the client in order to preserve legal rights, as long as the actions do not conflict with other ethical rules. The Committee also notes that the lawyer should take reasonable steps to locate the missing client.

Formal Opinion 101, “Unbundled Legal Services,” was revised by the Ethics Committee and reenacted as a new opinion. Formal Opinion 101 addresses unbundled legal services, where a lawyer undertakes part of the representation for a client but does not provide full services, such as in situations where a client cannot afford the full range of legal services but retains a lawyer to “ghostwrite” pleadings. The Ethics Committee incorporated the changes to Colo. RPC 1.2(c), which rule specifically allows limited representation, and the amendments to C.R.C.P. 11(b) and 311(b), which allow “ghostwriting” of pleadings. The opinion discusses the rule changes and their significance to lawyers in limited representations.

These rules and more will be discussed at CBA-CLE on July 26, 2016, at a breakfast program: “Ethics Rules Changes – Effective April 6, 2016.” Speakers Marcy Glenn, David Stark, and Jamie Sudler will discuss the new and revised rules and their implications for practitioners. Click the links below to register, or call (303) 860-0608.

 

ET072616L

CLE Program: Ethics Rules Changes — Effective April 6, 2016

This CLE presentation will occur on July 26, 2016, at the CBA-CLE offices (1900 Grant Street, Third Floor), from 8:30 a.m. to 9:50 a.m. Register for the live program here or register for the webcast here. You may also call (303) 860-0608 to register.

Can’t make the live program? Order the homestudy here: MP3Video OnDemand.

Five Cybersecurity Tech Tips: Worries to Give You the Willies

Editor’s Note: This post originally appeared on Attorney at Work on January 29, 2016. Reprinted with permission. See below for information about ordering Colorado CLE’s homestudy for our program, “Data Privacy & Information Security: Meeting the Challenges of this Complex and Evolving Area of the Law.”

By Sharon Nelson and John Simek

A keyboard with a red button - Privacy

A keyboard with a red button – Privacy

There are lots of cybersecurity worries to give you the willies in the wee hours of the morning, but we were asked to pick five. So here are some of the most common threats for lawyers to keep in mind.

1. Ransomware. We continue to see law firms struck by ransomware, which is a type of malware that encrypts your data (restricting your access to it) and then demands a ransom payment — usually in bitcoins — to get your data back. Training your employees not to click on suspicious attachments or links in email will help. They should stay away from suspicious sites as well since ransomware can be installed by just “driving by” an infected website.

Overwhelmingly, from a technological standpoint, you can defeat ransomware by having a backup that is immune to it. This can mean, particularly for solo lawyers, that you back up and then disconnect the backup from the network. For others, it means running an agent-based backup system rather than one that uses drive letters. Make sure your IT consultant has your backup engineered so that backups are protected — that way, even if you are attacked with ransomware, you can thumb your nose at the thief’s demands for money because you can restore your system from your backup. Of course, this means backups need to be made frequently to avoid any significant data loss.

2. Employees. Employees are by nature rogues. Every study made shows employees will ignore policies (assuming they exist) to do what they want to do. This often means people bring their own devices (BYOD) which may be infected when they connect to your network. They may also bring their own network (BYON) or bring their own cloud (BYOC). Certainly, your policies should disallow these practices (in our judgment) or, at least, manage the risks by controlling what it is done by implementing a combination of policies and technology.

Oh, and employees steal your data or leave it on flash drives or their home devices, too. This means you have “dark data” — data you don’t know about and over which you have no control. This means you may miss data required in discovery because you don’t know it exists. Your data may not be protected in compliance with federal or state laws and regulations. And you have no way to manage the data because you don’t know it is there. Once again, a combination of policies and technology should be in place to prevent these issues.

3. Targeted phishing. This is perhaps the greatest and most successful threat to law firm data. Someone has you in their sights — often they have done research on your law firm. They may know the cases you are involved in — and who your opponents are. They may know the managing partner’s nickname. Everything they know about you, they may use to get you to click on something (say, an email from an opponent referencing a specific case and saying “The next hearing in ___ case has been rescheduled as per the attachment). Many a lawyer has clicked on such attachments — or a link within an email.

The best solution to protect yourself from targeted phishing is training and more training — endlessly. One California firm was targeted by multiple phishing attacks but survived them because the lawyers and staff who received such emails questioned their authenticity.

Forget the loss of billable time. The loss of money, time and even clients due to a data breach can be far worse.

4. Interception of confidential information. Start with the proposition that everyone wants your data, including cybercriminals, hackers and nation states (including our own). Frankly, if they want your data and they have sophisticated tools, they will get it. So shame on you if you are not employing encryption (which is now cheap and easy) to protect confidential data transmitted and received via voice, text, and email. Encryption today is a law firm’s best friend. You may choose to use it always or in cases where it is warranted — but you surely should have the capability of encrypting.

5. Failure to use technology to enforce passwords policies. First, let us say that you should use multi-factor authentication where available and use it to protect sensitive data. But failing that, we recognize that passwords are still king in solo practices and small to midsize firms. Therefore, have your IT consultant assist you in setting up policies that can be enforced by technology, requiring that network passwords be changed every 30 days, not reused for an extended period of time — and mandating strong passwords (14 or more characters in length, utilizing upper- and lowercase letters, numbers and symbols). Passphrases are best. Iloveattorneyatwork2016! would do nicely.

There are many other “willies” out there, but address them one digestible chunk at a time!

Sharon D. Nelson (@SharonNelsonEsq) and John W. Simek (@SenseiEnt) are the President and Vice President of Sensei Enterprises, Inc., a digital forensics, legal technology and information security firm based in Fairfax, VA. Popular speakers and authors, they have written several books, including “The 2008-2015 Solo and Small Firm Legal Technology Guides” and “Encryption Made Simple for Lawyers.” Sharon blogs at Ride the Lightning and together they co-host of the Digital Detectives podcast.

 

CLE Homestudy: Data Privacy & Information Security — Meeting the Challenges of this Complex and Evolving Area of the Law

This CLE presentation took place Friday, January 22, 2016. Order the homestudy here: CDMP3 audioVideo OnDemand.

Colorado Court of Appeals: Entire Lease Void Where District Exceeded Leasing Authority

The Colorado Court of Appeals issued its opinion in Rocky Mountain Natural Gas, LLC v. The Colorado Mountain Junior College District on Thursday, September 11, 2014.

Lease—Municipality—Void—Reformation—Equitable Estoppel—Compensation.

Rocky Mountain Natural Gas, LLC (RMNG) and Colorado Mountain Junior College District(CMC) entered into a lease allowing RMNG to construct and operate a natural gas compressor station on CMC property. Despite the statutory three-year term limit on CMC’s authority to lease district property, the lease included an initial term of twenty years, with an option for RMNG to extend the lease for an additional twenty-year term. RMNG spent approximately $2.5 million in reliance on the lease, and CMC thereafter took action to set aside the lease as unenforceable, because the term of the lease exceeded CMC’s statutory authority. The court granted summary judgment in favor of CMC.

On appeal, RMNG contended that the district court erred by determining that the lease was entirely void and unenforceable. Because the evidence did not clearly show that CMC desired to lease the property for less than the twenty-year term stated in the agreement with RMNG, it was within the discretion of the district court to reject reformation of the contract as an appropriate equitable remedy. Further, because the entire contract was void, the court could not use the “savings clause” to reform the contract to the maximum three years. Accordingly, the district court did not err in determining that the term of years could not be reformed and that the entire lease was void and unenforceable.

RMNG also contended that the district court erred by refusing to apply equitable estoppel against CMC to prevent manifest injustice. Where a contract is void because it is not within a municipality’s power to make, the municipality cannot be estopped to deny the validity of the contract. Here, because CMC had no power to lease district property for any term exceeding three years, principles of estoppel do not apply against CMC. Accordingly, the district court did not err when it allowed CMC to deny the validity of the lease.

RMNG further argued that the district court erred because it refused to hold a hearing or make factual findings that would permit it to craft a remedy that fully compensated RMNG for CMC’s breach. CMC refunded the lease payments it received from RMNG. Accordingly, RMNG was fully compensated for the benefit it conferred on CMC and the district did not err when it denied further relief and granted summary judgment in favor of CMC. The judgment was affirmed.

Summary and full case available here, courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Equitable Relief, Not Legal Damages, Appropriate Where Contract Provided for Equitable Adjustment for Unanticipated Costs

The Colorado Court of Appeals issued its opinion in Parker Excavating, Inc. v. City & County of Denver on Thursday, October 25, 2012.

Contract Dispute—Equitable Relief.

In this government contracts case, plaintiff Parker Excavating, Inc. (Parker) appealed the trial court’s judgment awarding it $1.65 million under an equitable adjustment provision of Parker’s contract with the City and County of Denver’s Board of Water Commissioners (Denver Water). The judgment was affirmed.

This case arose out of a contract dispute between Parker and Denver Water over responsibility for increased costs associated with constructing a dam and reservoir at a sand and gravel pit. The trial court found that Parker’s costs increased by $2,373,679, but “as an equitable matter . . . both parties share some responsibility for the unanticipated muck.” The court concluded that Denver Water was more responsible than Parker. It then awarded Parker $1.65 million.

On appeal, Parker argued that the trial court erred in awarding Parker equitable relief rather than legal damages. The contract contained an equitable adjustment provision, entitling either party to seek an equitable adjustment for increased or decreased costs caused by unanticipated site conditions. Further, the contract excluded compensation for excavation costs. Therefore, from the plain language of the contract, the parties would have reasonably expected an equitable adjustment to be a remedy in equity. Further, the trial court did not clearly err in reducing the measure of equitable adjustment to account for Parker’s relative responsibility in not determining the extent of the muck. The trial court’s findings are, therefore, supported by evidence in the record that certain costs were attributable to Parker, and those findings were not disturbed on appeal.

Summary and full case available here.

CBA Ethics Committee Updates Formal Opinion 68, “Conflicts of Interest; Propriety of Multiple Representation”

The Colorado Bar Association Ethics Committee has been working on updating their Formal Ethics Opinions in order to reflect changes in the law, including the 2008 revision to the Colorado Rules of Professional Conduct. As part of that effort, the Ethics Committee released an updated version of Formal Opinion 68, “Conflicts of Interest; Propriety of Multiple Representation” in December 2011, and it was published in the March 2012 issue of The Colorado Lawyer.

Formal Opinion 68 addresses four specific conflict situations:

1) representation of both a husband and wife in negotiating a property settlement before dissolution proceedings commence;
2) representation of both the buyer and seller in a residential real estate transaction;
3) representation of both the buyer and seller of a business; and
4) representation of individuals in drafting an entity agreement, and representation of solely an entity in its formation.

The Ethics Committee opines that, in the first scenario, the dual representation would be impermissible under the Colorado Rules of Professional Conduct (Colo. RPC or Rules) because even if the divorce settlement agreement is uncontested, it must be approved by the court, and counsel cannot represent two parties whose interests are adverse under Colo. RPC 1.7.

In the second, third, and fourth scenarios, which are all transactional, the Ethics Committee declines to issue a blanket prohibition on representing both parties to the proposed transactions, but rather notes that each individual situation will require a thorough analysis of the propriety of the representation.

Opinion 68 provides a thoughtful and detailed evaluation of Colo. RPC 1.7 and its comments. It thoroughly examines informed consent, including when and whether it is appropriate, what can be consented to, how to obtain informed consent, the need to obtain new consent when there are situational changes, and confirmation in writing. Each scenario listed above is explored in depth, and the propriety of dual representation is examined for all for sample scenarios. The message of the Ethics Committee is clear: an attorney must examine the specific scenario involving a concurrent conflict of interest with the utmost scrutiny and caution prior to undertaking representation of conflicting parties.

The Ethics Committee develops its formal opinions as a means for providing Colorado attorneys with guidance. However, they issue the following caveat:

Formal Ethics Opinions are issued for advisory purposes only and are not in any way binding on the Colorado Supreme Court, the Presiding Disciplinary Judge, the Attorney Regulation Committee, or the Office of Attorney Regulation Counsel, and do not provide protection against disciplinary actions.